Home Daily Commentaries AUD opens lower as Trump tariffs take effect

AUD opens lower as Trump tariffs take effect

Daily Currency Update

The Aussie dollar drifted slightly lower and closed the week just above US$0.62. Gold has broken through the previous all-time high and reached a new all-time high of US$2,817 per troy ounce. With the tariffs coming into place over the weekend, traders have pushed the bullion higher as risk measures are favoured.

Despite the higher prices of Gold, the AUD drifted further out of correlation. The AUD opened significantly lower this morning, trading just above US$0.6150 on market open, making it a 0.8% lower open this morning compared to last week’s close. The AUD has also risen against the CAD on open trading at CA$0.9073 compared to last week’s close price of CA$0.9025.

Trump's tariffs have come into effect on Canada and Mexico with a levy of 25% being enforced. Consequently, we are again seeing a tit-for-tat trade war with Canada retaliating with counter-tariffs being placed on US$107B worth of goods from the US. Targeted industries are steel, aluminium and cars. However, the first tranche of tariffs will be aimed at orange juice, peanut butter, wine, coffee, motorcycles and cosmetics, totalling about CA$30B worth of goods.

Mexico’s President, Sheinbaum, has responded to the tariffs by ordering a plan B which may include retaliatory tariffs as well as non-tariff measures. Sheinbaum has called for greater dialogue and cooperation on drug trafficking as was with the case of deportation, rather than escalating with tariffs. Mexico’s main export partner is the US, with 80% of goods being sent there. As a result, tariffs would likely implicate Mexico with a significant GDP drop.

Key Movers

Renewed speculation on gold has helped push the gold bullion to an all-time high. However, commodities currencies have not benefited from the elevated prices as traders have stocked up on the yellow metal as a risk measure. Major currencies have dropped against the USD across the board on market open today. The most notable move is the USD/CAD, opening at 1.4740 compared to the close price of 1.4528 last week. Further volatility is expected to rattle the markets.

Tariffs of 25% have come into effect on Canada and Mexico, with Canada already having a plan outlined with retaliatory tariff measures. Mexico has also verbalised retaliatory action which include tariff and non-tariff measures.

 

Expected Ranges

  • AUD/USD: 0.6150 - 0.6270 ▼
  • AUD/EUR: 0.5960 - 0.6020 ▲
  • GBP/AUD: 1.9700 - 2.0200 ▲
  • AUD/NZD: 1.0950 - 1.1040 ▼
  • AUD/CAD: 0.8900 - 0.9150 ▲